nep-geo New Economics Papers
on Economic Geography
Issue of 2021‒12‒20
eight papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. The Choice of Technology and Economic Geography By Zhou, Haiwen
  2. Regional Disparities, Growth, and Inclusiveness By Mr. Holger Floerkemeier; Mr. Nikola Spatafora
  3. Isolated States of America: The Impact of State Borders on Mobility and Regional Labor Market Adjustments By Riley Wilson
  4. Entrepreneurial Ecosystems and Regional Persistence of High Growth Firms: A 'Broken Clock' Critique By Coad, Alex; Srhoj, Stjepan
  5. Uncovering Heterogeneous Regional Impacts of Chinese Monetary Policy By Tsang, Andrew
  6. Migration and Spatial Misallocation in China By Li, Xiaolu; Ma, Lin; Tang, Yang
  7. Refugee migration, labor demand, and local employment By Auer, Daniel; Götz, Lilia
  8. Agglomerationsvorteile und kommunales Steueraufkommen By Bergholz, Christian; Hundt, Christian; Osigus, Torsten

  1. By: Zhou, Haiwen
    Abstract: Empirical evidence shows that firms located in regions with larger population size are on average larger and more productive. To explain this empirical observation, firms producing intermediate goods are assumed to choose their technologies with different levels of fixed and marginal costs. In this general equilibrium model of economic geography, intermediate good producers engage in oligopolistic competition. The model is tractable and leads to interesting and analytical results. An intermediate good producer in the region with a higher population produces a higher level of output and has a lower marginal cost of production regardless of the existence of regional trade. With regional trade, if a worker moves from the region with a lower number of workers to the region with a higher number of workers, intermediate good producers in both regions choose less advanced technologies.
    Keywords: Technology choice, economic geography, international trade, increasing returns, oligopoly
    JEL: D43 F12 L13 O14 R12
    Date: 2021–12–04
  2. By: Mr. Holger Floerkemeier; Mr. Nikola Spatafora
    Abstract: We discuss regional disparities in economic performance and living standards. We first set out some key facts, and provide a conceptual framework to help analyze whether such disparities are efficient, or instead reflect market and/or policy failures. We examine whether policy attempts to reduce regional disparities necessarily involve a trade-off between equity and efficiency. We then investigate whether policymakers should focus on boosting the economic performance of lagging regions—or, conversely, accept the presence of regional disparities, and instead assist households in lagging regions through transfer payments, investments in education, health, and other basic services, and by facilitating out-migration.
    Keywords: Regional Disparities;Place-Based Policies;Inclusive Growth.;WP;market forces;agglomeration economy;supplier firm;wage competitiveness;community development;earnings differential;wage difference
    Date: 2021–02–12
  3. By: Riley Wilson (Brigham Young University)
    Abstract: I document a new empirical pattern of internal mobility in the United States. Namely, county-to-county migration and commuting drop off discretely at state borders. People are three times as likely to move to a county 15 miles away, but in the same state, than to move to an equally distant county in a different state. These gaps remain even among neighboring counties or counties in the same commuting zone. This pattern is not explained by differences in county characteristics, is not driven by any particular demographic group, and is not explained by pecuniary costs such as differences in state occupational licensing, taxes, or transfer program generosity. However, county-to-county social connectedness (as measured by the number of Facebook linkages) follows a similar pattern. Although the patterns in social networks would be consistent with information frictions, nonpecuniary psychic costs, or behavioral biases such as a sate identity or home bias, the data suggest that state identity and home bias play an outsized role. This empirical pattern has real economic impacts. Building on existing methods, I show that employment in border counties adjusts more slowly after local economic shocks relative to interior counties. These counties also exhibit less in-migration and in-commuting, suggesting the lack of mobility leads to slower labor market adjustment.
    Keywords: Internal migration, commuting, social networks, border discontinuities
    JEL: J6 R1
    Date: 2021–12
  4. By: Coad, Alex; Srhoj, Stjepan
    Abstract: The Entrepreneurial Ecosystems (EE) approach makes specific predictions regarding how EE inputs are converted into high-growth firms (HGFs) as an output. A simulation model draws out our hypothesis of regional persistence in HGF shares. Based on intuitions that EEs are persistent, we investigate whether regional HGF shares are persistent, using census data for 2 European countries taken separately (Croatia for 2004-2019, and Slovenia for 2008-2014). Overall, there is no clear persistence in regional HGF shares - regions with large HGF shares in one period are not necessarily likely to have large HGF shares in the following period. This is a puzzle for EE theory. In fact, there seems to be more persistence in industry-level HGF shares than for regional HGF shares. We formulate a 'broken clock' critique - just as a broken clock is correct twice a day, EE recommendations may sometimes be correct, but are fundamentally flawed as long as time-changing outcomes (HGF shares) are predicted using time-invariant variables (such as local universities, institutions and infrastructure).
    Keywords: High-Growth Firms,Persistence,Regional Persistence,Entrepreneurial Ecosystems,Clusters,Sectoral Systems of Innovation
    JEL: L25
    Date: 2021
  5. By: Tsang, Andrew
    Abstract: This paper applies causal machine learning methods to analyze the heterogeneous regional impacts of monetary policy in China. The method uncovers the heterogeneous regional im-pacts of different monetary policy stances on the provincial figures for real GDP growth, CPI inflation and loan growth compared to the national averages. The varying effects of expansionary and contractionary monetary policy phases on Chinese provinces are highlighted and explained. Subsequently, applying interpretable machine learning, the empirical results show that the credit channel is the main channel affecting the regional impacts of monetary policy. An imminent conclusion of the uneven provincial responses to the “one size fits all” monetary policy is that different policymakers should coordinate their efforts to search for the optimal fiscal and monetary policy mix.
    Keywords: China, monetary policy, regional heterogeneity, machine learning, shadow banking
    JEL: C54 C61 E52 R11
    Date: 2021–07–28
  6. By: Li, Xiaolu (Nanjing University of Posts and Telecommunications); Ma, Lin (Singapore Management University); Tang, Yang (Nanyang Technological University)
    Abstract: We structurally estimate the firm-level frictions across prefectures in China and quantify their aggregate and distributional implications. Based on a general equi-librium model with input and output distortions and migration, we show that the firm-level frictions are less dispersed and less correlated with productivity in richer prefectures. Counterfactual exercises show that reducing the within-prefecture mis-allocation increases the aggregate welfare, discourages migration towards large cities, and narrows the spatial inequality. Moreover, internal migration alleviates the impacts of micro-frictions on aggregate welfare and worsens their impacts on spatial inequality.
    Keywords: misallocation; regional trade; economic geography; welfare gain
    JEL: F12 O11 R12
    Date: 2021–09–01
  7. By: Auer, Daniel; Götz, Lilia
    Abstract: Whether or not immigration negatively affects the labor market outcomes of natives is an ongoing debate. One of the challenges for empirical evidence is the simultaneity of supply- and demand-side effects. To isolate the demand side, we focus on recent refugees in Germany who are exogenously allocated to districts and largely excluded from the labor market. Using panel data of all German districts between 2010 and 2018 and leveraging variation in the local stock of asylum seekers, we find that 1,000 asylum seekers create 267 jobs on average in a district. This growth effect is mainly driven by a demand for additional labor in service, public administration, and social work. As a consequence, we also observe a significant reduction in the local unemployment rate when more refugees arrive. The dynamic panel data estimates are robust to various sensitivity checks and two different instrumental variable approaches. Quantifying the demand side of immigration adds to our understanding of local labor market dynamics in an increasingly mobile world.
    Keywords: labor demand,refugee migration,employment growth,unemployment
    JEL: J21 J23 O15 R11
    Date: 2021
  8. By: Bergholz, Christian; Hundt, Christian; Osigus, Torsten
    Abstract: Unsere Untersuchungen zeigen flächendeckend für Deutschland, dass kreisfreie Städte im Vergleich zu kreisangehörigen Gemeinden im Durchschnitt über eine höhere Wirtschafts- und Steuerkraft verfügen. Danach erwirtschaften kreisfreie Städte ein Bruttoinlandsprodukt (BIP) von 50.854 € pro Einwohner und verzeichnen Steuereinnahmen in Höhe von 1.739 € pro Einwohner, während in kreisangehörigen Gemeinden das BIP 32.029 € pro Einwohner beträgt und die Steuereinnahmen pro Einwohner bei 1.283 € liegen. Für die Analyse des positiven Zusammenhangs zwischen BIP und Steuereinnahmen schauen wir insbesondere auf die Rolle der (Netto-)Agglomerationsvorteile und argumentieren, dass sie die Höhe der kommunalen Steuereinnahmen (pro Einwohner) über zwei unterschiedliche Kanäle beeinflussen können: zum einen durch die Inwertsetzung der von ihnen ausgehenden Externalitäten und der damit verbundenen Erhöhung der zu besteuernden Wertschöpfung (indirekter Wirkungskanal), zum anderen durch die direkte Bepreisung der Agglomerationsvorteile in Form von Hebesätzen (direkter Wirkungskanal). Bei Betrachtung der Gesamtsteuereinnahmen legen unsere empirischen Resultate nahe, dass der indirekte Wirkungskanal quantitativ bedeutsamer ist als der direkte Wirkungskanal. In welchem Umfang beide Kanäle zur Geltung kommen, gestaltet sich zwischen den fünf von uns untersuchten Steuerarten jedoch höchst unterschiedlich. Während für die Grundsteuer B vor allem der direkte Wirkungskanal bedeutsam ist, spielt bei den drei wirtschaftskraftbezogenen Steuern der indirekte Kanal die größere Rolle. Die Grundsteuer A weist insbesondere beim direkten Wirkungskanal einen hohen negativen Effekt auf. Der Grund dafür ist, dass bei land- und forstwirtschaftlich genutzten Flächen keine agglomerationsbedingen Renten existieren, die abgeschöpft werden können. Des Weiteren können wir zeigen, dass die kommunalen Einnahmen aus den wirtschaftskraftbezogenen Steuern (Gewerbe-, Einkommen- und Umsatzsteuer) in Ostdeutschland systematisch geringer ausfallen als in Westdeutschland, was insbesondere auf die in ostdeutschen Gemeinden durchschnittlich niedrigere Wirtschaftskraft pro Einwohner zurückzuführen ist.
    Keywords: Kommunale Steuereinnahmen,Öffentliche Finanzen,Agglomerationseffekte,Ländlich,Urban,Local government tax revenues,Public Finance,Agglomeration,Rural
    JEL: H20 R11 R51
    Date: 2021

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